Indiana Government's Budget Exceeds Expectations in 2025

The Indiana government's 2025 budget has exceeded expectations, thanks to strong sales tax returns and last-minute budget cuts that helped avert a major loss of revenue due to tariffs. State Budget Director Chad Ranney announced that the state finished the 2025 budget year with a general revenue surplus of $336.9 million.

Ranney attributed the surplus to a combination of $78 million worth of agency spending cuts and strong sales tax revenue from events like the Indianapolis 500 and the NBA Finals. The revenue numbers mean the state can maintain its level of services and hold on to its AAA credit rating, which allows it to borrow money at lower interest rates.

However, despite the better-than-expected revenue, Ranney noted that the state is still on track for a $2 billion revenue shortage over the next two budget years. The state's top money managers have projected a revenue surplus of $424.6 million for Fiscal Year 2026 and just $270.2 million for FY 2027.

Democrats, including Sen. Fady Qaddoura, have criticized the state's budget cuts as unfairly penalizing those most in need, particularly children and seniors. Qaddoura said that the state could have avoided a revenue shortage if past Republican administrations hadn't spent so much on the Indiana Economic Development Corp. or on expanding school choice vouchers.

“Technically and mathematically, the 2025 fiscal year ended with a breaking-even, almost, scenario, but the story that it doesn’t tell: At what expense? Who paid for it?” Qaddoura said. “The story to me about the 2025 fiscal year is that this continues to be similar to federal policy, a state budget that caters to those who have the means and neglects those who do not have the means.”

Gov. Mike Braun has expressed confidence in the state's ability to make up any differences in services required by the federal government. “If we’re enterprising ourselves, we’ll find ways, even if it puts the most burden on us, to find ways to do it better and more efficiently and I always go back to what makes the most sense,” he said.